Credit Suisse Group AG began a decisive weekend after some rivals turned cautious in their dealings with the bank as regulators urged it to seek a deal with Swiss rival UBS AG.
Credit Suisse Chief Financial Officer Dixit Joshi and his teams will meet over the weekend to discuss strategic scenarios for the bank, people with knowledge of the matter said Friday.
The 167-year-old bank is the biggest name caught up in the market turmoil sparked by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, forcing the Swiss bank to raise $54 billion in funds from the central bank.
Swiss regulators are encouraging UBS and Credit Suisse to merge, but neither bank wanted to, a source said. Regulators do not have the power to force the merger, the person said.
The boards of UBS and Credit Suisse were expected to meet separately over the weekend, the Financial Times said,
Credit Suisse shares rose 9% in aftermarket trading following the FT report. Credit Suisse and UBS declined to comment.
In the latest sign of their growing troubles, at least four major banks, including Société Générale SA and Deutsche Bank AG, have placed restrictions on their transactions involving Credit Suisse or its securities, five people with direct knowledge of the matter told Reuters.
“The Swiss central bank intervention was a necessary step to calm the flames, but it might not be enough to restore confidence in Credit Suisse, so there is talk of further action,” said Frederique Carrier, RBC’s head of investment strategy. Wealth Management.
The efforts to prop up Credit Suisse come as policymakers including the European Central Bank and US President Joe Biden sought to reassure investors and depositors that the global banking system is safe. But fears of broader problems in the sector persist.
Already this week, big US banks provided a $30bn lifeline to smaller lender First Republic, while US banks collectively sought a record $153bn in emergency liquidity from the Federal Reserve in recent years. days.
This reflected “financing and liquidity tensions in banks, driven by weakening depositor confidence,” ratings agency Moody’s said, which this week downgraded its outlook on the US banking system to negative.
In Washington, the focus has been on increased oversight to ensure that banks, and their executives, are held to account.
Biden called on Congress to give regulators greater power over the banking sector, including imposing higher fines, repossessing funds and banning officials from failing banks.
Some Democratic lawmakers have called on regulators and the Justice Department to investigate Goldman Sachs’ role in SVB’s collapse, Rep. Adam Schiff’s office said.
MARKET PROBLEMS REMAIN
Bank shares around the world have been hit since the collapse of Silicon Valley Bank, raising questions about other weaknesses in the financial system.
Shares of US regional banks fell sharply on Friday and the S&P Banks Index plunged 4.6%, taking its drop in the past two weeks to 21.5%, its worst loss in two. weeks since the COVID-19 pandemic rocked the markets in March 2020.
First Republic Bank closed Friday down 32.8%, taking its loss over the past 10 sessions to more than 80%. Moody’s downgraded the bank’s debt rating after the market closed.
While support from some of the biggest names in US banking prevented the First Republic from collapsing this week, investors were stunned by revelations about its cash position and how much emergency liquidity it needed.
SVB Financial Group filed for a reorganization supervised by a bankruptcy court, days after regulators took over its Silicon Valley Bank unit.
Banks interested in buying SVB and Signature Bank had been asked by regulators to submit offers by Friday, people familiar with the matter said.
Regulators are considering retaining ownership of the Signature and SVB securities to allow smaller banks to participate in auctions for failed lenders, a source familiar with the matter said.
